A reduction in cash flow, should property tax payment deadlines be extended, could have area school districts looking for short-term loans to help pay bills early in the 2020-21 school year.

During a finance committee meeting Monday night, Lehighton Area School District’s administration said a tax revenue anticipation note is not out of the question.

Impact of property tax payment extension

Under normal circumstances, taxpayers receive their bill around July 1 and have two months to pay the discounted rate and four months to pay without penalty.

Should Lehighton, or state legislators, decide to give taxpayers longer to pay the discounted price or the flat rate, pre-penalty price, Lehighton business administrator Patricia Denicola said cash flow could become a concern.

“Our state subsidies usually don’t come until later in the year, so from July until September, we really rely on that property tax revenue,” she said. “If deadlines to pay get extended, we could be looking at a short-term tax anticipation revenue note to cover that period. We would then pay it back the same fiscal year as tax revenue comes in. Plans can be structured to pay it off early with no penalty.”

Pressed by school board member David Bradley, Denicola said she would not tie herself in to a possible amount for a tax anticipation note on Monday, opting to wait and see if it is actually needed.

Bradley, who has favored extending the deadline to pay the discount price, said by his calculations, if every Lehighton taxpayer paid during the 2% discount period, it would come to less than $400,000.

“That is less than 1% of our budget and we could help out a lot of our stakeholders,” Bradley said.

Other ideas

While Lehighton could extend the deadline to pay property taxes across the board, director Nathan Foeller said another option is the district could also give relief on a case-by-case basis.

Foeller asked if the district could set up a system where property owners could apply for an extension if they need relief.

“I think that way the relief is there should people need it, but many people may still pay during the regular discount period,” Foeller said.

Board President Larry Stern lauded the idea.

“Many people are affected by COVID-19, but there are also many people who are not,” Stern said. “A lot of people are still working so I think we could do something where folks who need relief can get it, and folks not affected could stay on the normal schedule. That’s a viable solution to me.”

CARES Act money

The Pennsylvania Department of Education submitted its Elementary and Secondary School Emergency Relief Fund application to the U.S. Department of Education last week to obtain approximately $523.8 million in emergency, one-time funds to help schools respond to COVID-19 impacts.

Under the federal Coronavirus Aid, Relief and Economic Security Act, at least 90%, or $471 million, of the funds must flow through to traditional public schools and charter schools. Each entity will receive an amount proportional to federal Title I-A funds received in 2019 under the Every Student Succeeds Act.

While Lehighton is projected to receive $474,000, Denicola said much if it may just supplant state subsidy money the district gets every year, meaning it would not be new income.

The state estimated the district would receive $9.46 million in basic education subsidy, $1.6 million in special education subsidy, and $374,159 in Ready To Learn funding.

“What we’re hearing, however, is the virus has impacted the revenue projections the state is using to come up with those numbers,” Denicola said. “So the additional money in the state budget for education may very well go away and it is expected they will almost certainly replace it with the CARES Act money.”

Year-to-date finances

Denicola said the district has collected $35.38 million of the $41.36 million it expected to take in during 2019-20. The biggest questions, however, are still to come.

“What we just don’t know at this point is how the COVID-19 pandemic is going to impact our revenue for the last quarter,” she said.

Lehighton has spent $34.01 million of an expected $43.89 million to date.

While one would think districts are saving bundles of money with students not in the physical school buildings, that isn’t the case.

“We’re seeing a little savings for our utilities, but we’re complying with the state’s passing of Act 13, and that means every employee continues to get paid just as they normally would,” Denicola said. “We’re not saving the amounts people would expect.”

Stern said he doesn’t think the “state had a full grasp on what it was passing” when it approved Act 13.

“It gave school boards no control over who gets paid during the pandemic or how much,” Stern said. “That includes professional staff, nonprofessional staff, part-time workers, hourly workers, coaching and activity stipends, right down the line. We’re feeling the full impact of that.”